Vanishing Premium – Lawsuits

  • Q. Do you recall the vanishing premium litigation?
  • A (Wilcox): Very well.
  • Q. Would you agree that the sales practices that were used in the vanishing premium — in selling those policies was problematic?
  • MR. HIGGINS: Objection. Vague.
  • THE WITNESS (Wilcox): In a limited number of cases, that was true. But again, that’s a different question than you asked before.
    • Problematic is not the same as unlawful.
  • MR. PAUL: Q. Do you not believe that the sales practices used — that were at issue in the vanishing premium issue were unlawful?
  • …..
  • THE WITNESS (Wilcox): There may have been a few instances where it was unlawful. In general, it was not.

—  Deposition of Robert E. Wilcox, Former Utah Insurance Commissioner and Chairman of the Life Disclosure Working Group (NAIC)

66-1 –2012 0313 – LC – Thao v. Midland National – Document 66-1 -Deposition of Robert E. Wilcox – 09-C-1158 – 9p

1990s

  • 1995 – MDL-1061 – IN RE: Prudential Insurance Company of America Sales Practices Litigation
    • NJ 04/27/1995 08/03/1995 12/17/2003
    • 2.2 Million People, Settlement $2,200 /person
  • 1996 –  MDL -1109 – IN RE: Manufacturers Life Insurance Company Premium Litigation
    • Moskowitz, Barry Ted CAS 02/28/1996 07/17/1996 03/19/2001
  • 1997 – MDL-1186 – IN RE: Minnesota Mutual Life Insurance Company Sales Practices Litigation
    • Doty, David S MN 06/03/1997 10/06/1997 08/28/2000
  • 1998 – LC – Goldberg v Manufacturers Life Insurance (ManuLife) – New York
    • Judge: Beatrice Shainswit, J.
    • 242 A.D.2d 175 (N.Y. App. Div. 1998), 672 N.Y.S.2d 39
    • Similarly, the cause of action under Insurance Law § 2123 for misleading statements made by an insurer’s agent or representative, which survived the dismissal motion only as to HSMR and is governed by a three-year Statute of Limitations (CPLR 214), begins to run at the time the false or misleading statements are made.
    • Again, since the alleged misrepresentations were made in connection with the purchase of the policy, the three years began to run in 1988 and expired in 1991.
  • 1999 – LC – Gaidon vs Guardian
  • 1999 – LC – Goshen. Mutual Life Insurance of New York
    • 2000 – LC – Goshen v Mutual Life Insurance Company of New York
    • Judge: Beatrice Shainswit, J
  • 1999 0914 – GOV (House-Report) – Interstate Class Action Jurisdiction Act of 1999  —  [BonkNote]  —  47p
    • 39 – Equitable Life Assurance Company, an Iowa corporation, agreed to a $20 million settlement of two class-action lawsuits involving 130,000 persons filed in Pennsylvania and Arizona State courts. The class action alleged that Equitable misled consumers, in violation of State insurance fraud law, when trying to sell ”vanishing premium” life insurance policies in the 1980s. Equitable sold the policies when interest rates were high, informing potential customers that after a few years, once the interest generated by their premiums was sufficiently high, their premium obligations would be terminated. However, when interest rates dropped, customers ended up having to continue to pay the premium in full.49
      • 49 See David Elbert, ”Lawsuits to Cost Equitable $20 Mill,” Des Moines Register, July 19, 1997 at 12 and ”Cost of Settling Lawsuits Pulls Equitable Earnings Down,” Des Moines Register, August 6, 1997 at 10.

2000s

  • 2000 – LC – COLE, M.D, v. The Equitable Life Assurance Society oF the United States
    • Decided: April 13, 2000
    • Supreme Court, Appellate Division, First Department, New York.
    • 1998 – LC – Judgment, Supreme Court, New York County (Judge Beatrice Shainswit, J.), entered October 1, 1998, dismissing the complaint,
  • 2002 – LC – Russo v Massachusetts Mut. Life Ins. Co. (192 Misc 2d 349 [Sup Ct, Tompkins County]).
  • 2002 – LC – James Szymanski vs. Boston Mutual Life Insurance Company., 56 Mass. App. Ct. 367, March 7, 2002 – November 7, 2002
    • <WishList> – Victoria E. Fimea, Evan M. Tager, & Peter C. Choharis, for American Council of Life Insurers, amicus curiae, submitted a brief.
  • 2009 – LC – Kaldenbach vs Mutual of Omaha, California
  • Westchester Pennsylvania
  • Friedman v Manufacturer’s Life
  • Weathers v. Metropolitan